CUNA President/CEO Jim Nussle stressed the importance of regulatory relief Tuesday before the House Financial Services Committee. Nussle was a witness at a hearing examining committee chair Rep. Jeb Hensarling’s (R-Texas) alternative bill to the Dodd-Frank Act, the Financial CHOICE Act.
“A constant refrain I hear from our members is that they're being crushed by regulations implemented mostly in response to a crisis they neither caused, nor contributed to,” Nussle told the committee. “The time and financial costs of regulatory burden impedes the ability of credit unions to serve their members, and is really the leading driver of credit union consolidation, which has accelerated since 2010 and is now at a record pace.”
Nussle submitted to the committee a copy of CUNA’s comprehensive regulatory burden study, which estimates that regulatory burden cost America’s credit unions and their members $7.2 billion in 2014, up from $4.4 billion in 2010.
Title I of Hensarling’s bill would reduce regulatory burdens for credit unions and other financial institutions with greater than a 10% leverage ratio. Approximately 65% of all credit unions fall under this category--credit unions that hold roughly 62% of assets and serve nearly 60% of credit union members.
“We appreciate that this legislation structures the higher capital threshold as an option, rather than a requirement,” Nussle said. “We would ask you to resist efforts to require credit unions to hold additional capital because this could reduce their ability to lend to credit union members; further, such a requirement would be inappropriate and unnecessary for credit unions because they don’t have a history of capital inadequacy.”
Rep. Randy Hultgren (R-Ill.) said he was concerned about the “one-size-fits-all” regulatory approach, and Nussle stated that CUNA is working to ensure that approach is no longer taken.
Rep. Keith Rothfus (R-Pa.) expressed concerns about credit union products and services that are negatively impacted by overregulation, and also said he was worried that additional compliance costs will be borne by consumers.
He asked Nussle for any examples of credit union products and services affected by overregulation.
Nussle shared that credit unions in smaller communities are “severely curtailed” in offering mortgages. “If you’re trying to establish credit, if you’re trying to buy a home, that’s pretty tough for people in that community to not have that access,” he said.
Nussle reiterated that credit unions are “part of the solution" that Congress should be turning to in order to increase access to capital, opportunities and jobs.
“People will search out credit, and they’re going to go find money. The question is, do you want them to go to a regulated, safe and sound institution or into a predatory situation?” Nussle said. “I think [regulatory burden] is making it more difficult to build and establish that credit in a safe and sound way.”
See the video below for Nussle's testimony, starting at 42:19.